Synopsis:

ANZ suggests tactically buying EUR/USD on a short-term bounce driven by seasonal trends, while strategically recommending a sell on EUR/AUD due to tariff sensitivity in the eurozone and relative RBA hawkishness.

Key Points:

• EUR/USD Tactical Buy:

  • Recent Downward Trend: EUR/USD has fallen steadily since its September double-top at 1.12, reaching a low of 1.03 in November, its weakest level since November 2022.
  • Seasonal Strength: December typically supports a stronger EUR, suggesting a potential short-term bounce toward 1.07.
  • Oversold Conditions: Technical indicators, such as stochastic oscillators, signal oversold conditions and support a temporary rebound.
  • Broader Trend Context: ANZ does not view this as a reversal but rather a consolidation phase before potential further downside in 2025.

• EUR/AUD Strategic Sell:

  • Entry and Target Levels: Recommended sell at levels above 1.62, with a target of 1.56 by end-2025.
  • Tariff Sensitivity: The eurozone’s greater sensitivity to tariffs makes the EUR more vulnerable compared to the AUD.
  • Central Bank Divergence: A relatively hawkish Reserve Bank of Australia adds support for the AUD.

Conclusion:

ANZ recommends tactically buying EUR/USD in the short term to capitalize on seasonal strength but maintains a bearish medium-term outlook. Simultaneously, selling EUR/AUD offers a strategic opportunity to benefit from economic and monetary policy divergences, with a target of 1.56 by the end of 2025.